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Strategy Video: Individual Technical Analysis for Dollar, Euro, Yen

Strategy Video: Individual Technical Analysis for Dollar, Euro, Yen

John Kicklighter, Chief Strategist

Talking Points:

  • Technical analysis is inherently performed on 'pairs' that we trade rather than individual currencies
  • From a fundamental perspective, the evaluation often begins with a specific view of a single currency
  • We make 'indexes' similar to the USDollar for Euro, Pound, Yen and Aussie Dollar for technical review

See the DailyFX Analysts' 2Q forecasts for the Dollar, Euro, Pound, Equities and Gold as well as our favorite 2016 trading opportunities in the DailyFX Trading Guides page.

In FX fundamental analysis, the evaluation is often initiated with a review of a single, market-moving currency. Then we move on to assess pairings. For technicals, the approach is generally reversed. We find a setup or market conditions that are attractive for a single pair and then perhaps evaluate its components by looking further out at related crosses. Assessing the strength or weakness of the components of those pairs we trade is important for a deeper appreciation of potential and momentum. While we can look across all the crosses for a specific pair - say all the Yen crosses - we can also make our own index to reflect upon a specific currency in relief. While we can weight these single currency measures according to our own interests, I create equally-weighted indexes for the Euro, Japanese Yen, Australian Dollar and British Pound to review their standings and potential. We use this strategy video to look at the key currencies in a unique way, and I show you how to make these indexes yourself.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.